If a Consumer Receives 22 Units of Marginal Utility from Consuming

question 84

Multiple Choice

If a consumer receives 22 units of marginal utility from consuming the first can of lemonade, 20 units from consuming the second, and 15 from the third, the total utility of consuming the three units is

• A)57 utility units.
• B)35 utility units.
• C)15 utility units.
• D)unknown as more information is needed to determine the answer.

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Definitions:

Flexible Budgets

Budgets that are designed to vary in accordance with changes in the level of activity or output, to provide more accurate costing and planning.

Spending Variance

The difference between the actual amount of the cost and how much the cost should have been, given the actual level of activity. A favorable (unfavorable) spending variance occurs because the cost is lower (higher) than expected, given the actual level of activity for the period.

Static Planning Budget

A projection of budget figures based on a fixed level of activity or volume, not adjusted for changes.

Flexible Budget

A budget that adjusts or varies with changes in the volume of activity, revenue, or other factors affecting budgetary needs.